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Major push for grand FTA

Southern Times, Namibia

Major push for grand FTA

By Felix Njini

10 September 2010

Windhoek - The envisaged grand Free Trade Area (FTA), a grouping of COMESA, EAC and SADC will hold a decisive tripartite summit in January 2011 in South Africa as a major push for coalescence amongst the 26 countries gathers traction.

The Common Market for Eastern and Southern Africa (COMESA), Eastern African Community (EAC) and Southern African Development Community (SADC)’s membership constitute more than half of the number of the entire African Union membership.

The three blocs are pushing for greater economic convergence through the envisaged grand FTA, a gambit whose rationale is that combined gross domestic product for the 26 countries is a building block towards an African Economic Community.

COMESA secretary-general Sindiso Ngwenya told journalists in Windhoek that the January summit would be the spring board for the roll out of the ambitious grand FTA.

Countries under COMESA are Burundi, Comoros, DRC, Djibouti, Egypt, Eritrea, Egypt, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

Tanzania, Burundi, Kenya and Rwanda, also belong to the EAC while DRC, Madagascar, Malawi, Tanzania, Swaziland, Zambia and Zimbabwe’s membership also overlap into the 15-member SADC.

The January summit is critical as it is expected to lend political weight to the envisaged FTA and sanction a roadmap towards operationalisation of the FTA and consequently, official launch in 2012, Ngwenya said.

The three blocs would adopt a resolution to establish a tripartite secretariat which will drive the whole FTA agenda, Ngwenya explained.

Ngwenya defended the envisaged grand FTA, which he said fully implemented could propel Africa to number six on the world’s economic demography.

’When business trade in economic space-the bigger the more attractive magnet it is to investors, that is our rationale behind the FTA,’ Ngwenya said.

’We will hold a tripartite summit in January 2011 to be hosted by South Africa and we are finalising the dates now for the summit,’ he added.

In July the three blocs agreed that at their next meeting they would come up with a pronouncement on the way forward. Proposals to be considered by the January summit include areas covering various complementary areas necessary for effective functioning of a regional market of that magnitude.

Major issues to be tackled at the January summit is a proposal is to set up the FTA on a tariff-free, quota free, exemption free basis by combining the existing FTAs of COMESA, EAC and SADC.

Expectations are that by 2012, all the regional FTAs would have scrapped completely any exemptions or sensitive lists (products).

Provision would also be in place for countries that want to maintain a few sensitive products in trading with some major economic partners, but only for a specified period.

Just like the regional blocs, the FTA will have infrastructure development on its radar and once countries sign the FTA, they are expected to have six months to complete domestic process which requires them to ratify the Agreement, set up support institutions and adopt relevant customs procedures and instruments. Should the process be completed on schedule, the grand FTA should be launched in 2012, the three blocs agreed in July.

The three regional blocs are unanimous that the grand FTA would have a combined population of 527 million people and a combined gross domestic product (GDP) of US$875 billion. The GDP of the 26 countries will hit US$1 trillion in 2012, Ngwenya said.

’By 2020, if we can create one single market, we shall leapfrog as a continent and become sixth in the world,’ Ngwenya said.

’We are also finalising details of setting up a tripartite secretariat, we will have officers who will be supervised by, a structure that will make sure that we move forward,’ Ngwenya said. The only foreseeable problem in implementing the FTA is the rules of origin, Ngwenya said. ’The most contentious issue has been the rules of origin but under globalisation its one issue which does not exist. Under globalisation you don’t have anything called a Toyota vehicle exclusively for Japan,’ Ngwenya said. Rules of origin are used to determine the country of origin of a product for purposes of international trade. ’There are people who have not kept pace with the changing world but we are moving and we are not going to allow those who want to hold us back,’ Ngwenya said.